Plenty of excitement for UKOG shares as a newsletter emerged on the afternoon of December 21st on various Facebook and Twitter posts apparently from Hoyer Petrolog . HOYER Petrolog - "delivering logistics solutions for every kind of bulk Petroleum-based product from bulk retail, commercial and aviation fuels such as petrol, diesel, gasoil and kerosene through to jet fuel, bitumen, bitumen emulsions, fuel oils and lubricants".
The shares ended up 17% up 4.125p, after a bounce from 3.35p the day before.
If this a hoax it is a very well constructed one and it does seem unlikely but an RNS is needed. So if a contract has been announced by Hoyer Petrolog UK with UKOG for two tankers for oil deliveries from Broadford Bridge in West Sussex to Hythe in Southampton Monday - Friday this is highly encouraging. It is not a memorandum of understanding, it states a signed contract for tankers. If this is the case, it seems oil must be flowing at a reasonable rate from Broadford Bridge or a contract was set up with a caveat that it can be cancelled if no flows.
But news could and should be due today, December 22nd, to confirm or refute these social media claims. It has been over one month since the last operational update from Broadford so it is about time that Steve Sanderson told shareholders what is going on. If the newsletter is anything to go by, could be a mighty exciting RNS. After the botched cementing on BB-1-z, shareholders could do with some extra good news from Broadford to revisit the 10p area, rather than 4p.
In addition to action at BB, on 19th December the Horse Hill consortium, which drilled the original HH-1 well near Gatwick Airport issued an ops update confirming that the "150-day production flow-test and new drilling programme set to commence in late winter 2017/18". UKOG is fully funded for Horsehill and PEDL 143 (Holmwood near Dorking) following the painful £10m loan agreement with Cuart Investments, a consortium arranged by Riverfort Global Capital. This arrangement has depressed the share price in recent weeks as shares have flooded the market to meet this loan obligation.
2018 Horse Hill Flow Test Programme
Following a short period of civil works to upgrade site facilities, a 150-day production testing programme focused upon the Portland, KL3 and KL4 reservoirs will commence. As commercially viable initial flow rates were established by the 2016 flow tests, the 2018 testing programme's goal is to confirm that HH-1's reservoirs are each connected to a commercially viable oil volume, thus enabling a declaration of commerciality to be made.
The Portland, KL3 and KL4 flow tests, each planned for around 30-40 days duration, will consist of a sequence of stabilised steady state flow and shut in periods to establish the oil in place ("OIP") directly connected to the well. A short maximum flow-rate test will also be included for each reservoir. If time permits, a further short-term test of a deeper untested Kimmeridge reservoir may be undertaken.
Testing will commence with the Portland reservoir, which in the Company's opinion, given the 323 bopd stable pumped rate achieved in 2016 and the 32 million barrels most likely OIP calculated by Xodus in 2017, is a strong candidate for commercial viability. Subject to a successful test, a Portland commercial declaration is expected to be made by mid-2018. A Kimmeridge commerciality declaration would follow programme completion and analysis of reservoir engineering data.
2018 HH drilling programme
Subject to a successful testing outcome in the Kimmeridge and Portland, the HH-2 well is planned as a future Portland producer, with an expected spud towards the end of Summer 2018. Drilling plans include optionality to deepen HH-2 into the Kimmeridge to gather core and image log data, together with a possible northwards deviation to access the adjacent oil bearing Collendean Farm fault block's significant Portland OIP.
The HH-1z Kimmeridge sidetrack spud is now planned for 2019 following construction of a Kimmeridge reservoir model utilising HH-1 Kimmeridge production data, reservoir data from the Company's 100% owned Broadford Bridge-1 & 1z Kimmeridge discovery and any future HH-2 Kimmeridge core.